Gross v Empire Healthchoice Assur., Inc.

[*1] Gross v Empire Healthchoice Assur., Inc. 2006 NY Slip Op 50903(U) [12 Misc 3d 1155(A)] Decided on May 18, 2006 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 18, 2006
Supreme Court, New York County

Jeffrey M. Gross, M.D. and Union Square Rehabilitation and Sports Medicine, Plaintiffs,

against

Empire Healthchoice Assurance, Inc., Guardian Life Insurance Company of America, Horizon Healthcare of New York, Inc., Healthcare Insurance Plan Of Greater New York, Inc. and Cigna Healthcare of New York, Inc., Defendants.



602848-05



For Plaintiffs Jeffrey M. Gross, M.D. et al.

Meiselman, Denlea, Packman,

Carton & Eberz P.C.

1311 Mamaroneck Avenue

White Plains, New York 10605

(Jill Owens, Barry Cepelewicz)

For Defendant Empire Healthchoice Assurance Inc.

Morrison Cohen LLP

909 Third Avenue

New York, New York 10022

(Howard Wolfson)

For Defendant Horizon Healthcare of New York, Inc.

Sills Cummins Epstein & Gross P.C.

30 Rockefeller Plaza

New York, New York 10112

(Jonathan Jemison)

Bernard J. Fried, J.

In this action, the plaintiffs are Jeffrey M. Gross, M.D., a physician specializing in physical [*2]medicine and rehabilitation, and Union Square Rehabilitation and Sports Medicine, a medical practice whose sole owner is Dr. Gross. The defendants, each a managed healthcare insurer, are Empire Healthchoice Assurance, Inc. (Empire), Horizon Healthcare of New York, Inc. (Horizon), Guardian Life Insurance Company of America (Guardian), Health Insurance Plan of Greater New York, Inc. (HIP), and Cigna Healthcare of New York, Inc. (Cigna).

The complaint against the defendants asserts ten causes of action: account stated, breach of common law duty of good faith and fair dealing, promissory estoppel, negligent misrepresentation, tortious interference with business relations, civil conspiracy, defamation per se (by all defendants), defamation (by defendant HIP), violation of New York General Business Law § 349, and declaratory judgment. Empire and Horizon each filed a motion (Motion Sequence Numbers 001 and 002) seeking to dismiss the complaint pursuant to CPLR 3211(a)(7).[FN1]

According to the complaint, starting in 2002, Dr. Gross began informing many major healthcare insurers, including defendants, that he would use a non-invasive treatment called Extracorporeal Shock Wave Therapy (ESWT) to treat patients with chronic orthopedic conditions. The ESWT treatment is provided by using a device called Sonocur Basic (Sonocur) that emits low-energy ultrasound. The complaint states that the Sonocur machine, which has been used for decades to treat kidney and gall stones, recently received approval from the Food and Drug Administration for treating lateral epicondylitis (more commonly known as tennis elbow), and has been found in medical studies to be effective in treating chronic tendonitis related conditions. The complaint also states that, since August 2002, Dr. Gross began to provide literature describing the Sonocur machine and his intended use of it to many insurers, including defendants.

The complaint alleges that before treating patients, Dr. Gross obtained from defendants verbal pre-approval to use ESWT and Sonocur to treat orthopedic conditions, and discussed with them the billing codes for compensation of services. When defendants refused to provide written confirmation of purported approvals despite repeated requests, plaintiffs memorialized the alleged approvals on special forms and submitted letters of medical necessity. For three years, Dr. Gross and his practice were paid for most of the services; as for those that were not paid, the complaint states that defendants did not raise the issues that are the subject of the instant litigation.

The complaint also alleges that, within several months of each other, beginning with Empire in the Fall of 2004, defendants informed Dr. Gross that ESWT was an experimental and investigational modality not approved to treat the orthopedic conditions that he was treating, and that the procedure code (code 50590) used by plaintiffs to claim compensation for services was inappropriate.[FN2] The complaint further alleges that defendants accused Dr. Gross of misrepresenting [*3]the treatments he provided and engaging in improper billing. While only defendant HIP purportedly reported Dr. Gross to the New York State Insurance Department for fraud, all defendants demanded the return of monies paid to plaintiffs over the past three years, which aggregated more than $600,000. In addition, the complaint alleges that defendants are now withholding payments on all of plaintiffs' compensation claims, even those that have nothing to do with Sonocur-EWST, or are forcing plaintiffs to go through costly and time-consuming procedures for each and every claim.

Empire and Horizon each filed a motion, pursuant to CPLR 3211(a)(7), seeking to dismiss the complaint for failure to state a cause of action upon which relief can be granted. The motions, which contain similar legal and factual assertions, are consolidated for disposition.

In considering a CPLR 3211 motion to dismiss, "our task is to determine whether plaintiffs' pleadings state a cause of action. The motion must be denied if from the pleadings' four corners, factual allegations are discerned which taken together manifest any cause of action cognizable at law [internal quotation marks omitted]." Richbell Info. Services, Inc. v Jupiter Partners, L.P., 309 AD2d 288, 289 (1st Dept 2003), quoting 511 W. 232nd Owners Corp. v Jennifer Realty Corp., 98 NY2d 144, 151-152 (2002). The pleadings are also to be afforded a "liberal construction," and the court is to "accord plaintiffs the benefit of every possible favorable inference." Leon v Martinez, 84 NY2d 83, 87-88 (1994). On the other hand, while factual allegations contained in a complaint should be accorded "favorable inference," bare legal conclusions and inherently incredible facts are not entitled to preferential consideration. Sud v Sud, 211 AD2d 423, 424 (1st Dept 1995).

Account Stated (Plaintiffs' First Cause of Action)

The complaint asserts that, throughout the past two to three years, defendants never informed plaintiffs that the Sonocur-ESWT treatment was investigational or experimental (i.e. not a "covered service"), never contested that the use of billing code 50590 was inappropriate, and had ample time to review the compensation claims submitted by plaintiffs. Hence, plaintiffs assert that, based on the "account stated" doctrine, defendants should be estopped or foreclosed from demanding return of the monies already paid to plaintiffs.

An "account stated" is "an agreement between the parties to an account based upon prior transactions between them with respect to the correctness of the separate items composing the account and the balance due, if any, in favor of one party of the other." Paul, Weiss, Rifkind, Wharton & Garrison v Koons, 4 Misc 3d 447, 450 (Sup Ct, NY County 2004), quoting Chisholm-Ryder Co., Inc. v Sommer & Sommer, 70 AD2d 429, 431 (4th Dept 1979). Under this doctrine, "where an account is made up and rendered, he who receives it is bound to examine the same ... if he admits it to be correct, it becomes a stated account and is binding on both parties the balance being the debt which may be sued for and recovered at law ...." Lockwood v Thorne, 11 NY 170, 174 (1854). Because a party receiving an account statement must examine it and make all necessary objections, an agreement to pay a debt may be implied if the party keeps the statement without objecting to it within a reasonable time, unless fraud, mistake or other equitable considerations are shown. Kramer, Levin, Nessen, Kamin & Frankel v Aronoff, 638 F Supp 714, 719 (SD NY 1986), citing Rosenman Colin Freund Lewis & Cohen v Neuman, 93 AD2d 745 (1st Dept 1983). [*4]

Based upon the allegations of the complaint, plaintiffs may well have an affirmative defense under the account stated doctrine to a payment refund claim, if defendants were to commence an action against plaintiffs seeking refund pursuant to the provisions of their respective participating provider agreements with plaintiffs.[FN3] Rosner v Globe Valve Corp., 196 Misc 408 (Sup Ct, NY County 1949) (account stated could be invoked as a cause of action to recover debts owed or as an affirmative defense against claims for balance due). However, defendants have yet to commence any legal action against plaintiffs. Thus, the account stated cause of action, as invoked in the complaint, is akin to a request for a declaratory judgment that defendants be estopped from seeking refunds from plaintiffs.[FN4]

In Employers' Fire Ins. Co. v Klemons, 229 AD2d 513 (2nd Dept 1996), an insurer commenced an action seeking a judgment declaring that in the event the insured-defendants sued to recover under an insurance policy, the defendants' suit would be time-barred and the insurer would not be liable. The Second Department noted that "[b]efore an action is even commenced [by the insured-defendants], any declaration as to the applicability of a period of limitations [as an affirmative defense] is purely advisory ...." Id. at 514. The Court reasoned that, at the time when the insurer's suit was commenced, "all that was pending was an insurance claim by the defendants against a policy issued by the plaintiff, which the plaintiff had neither allowed nor denied. Hence, there was no justiciable controversy to justify commencement of a declaratory judgment action." Id. Thus, the insurer's cause of action for declaratory relief was dismissed.

The same rationale applies in the instant case in dismissing the cause of action based on the account stated doctrine, inasmuch as plaintiffs are not seeking to recover any indebtedness owed to them (since they have been paid), but are seeking equitable relief tantamount to a declaration that they are not liable (based on the defense of account stated) for any refund claims that may be asserted by defendants in the event defendants commence an action to recover such claims.

In support of its motion to dismiss, Empire contends that an allegation of indebtedness is an essential element of an account stated cause of action, and its prior payments of plaintiffs' account statements - thus no indebtedness - warrants dismissal of this cause of action. In response, plaintiffs characterize Empire's contention as simply making a belated objection to prior account statements and the objection - whether based on fraud, mistake or otherwise, or whether it is timely - is an open question of fact, and not grounds for dismissal. The cases cited by plaintiffs, however, do not support such a proposition; instead, they support Empire's contention. See e.g. [*5]Kramer, Levin, Nessen, Kamin & Franel v. Aronoff, 638 F Supp at 719 (account stated action may be used to sue for a debt that is recovered at law); see also Rosenman Colin Freund Lewis & Cohen v Neuman, 93 AD2d at 746. Indeed, plaintiffs have not cited a single case sustaining an account stated cause of action in which a plaintiff did not allege an indebtedness owed.

Because the complaint fails to allege any indebtedness owed to plaintiffs, the motions to dismiss the accounted stated claim are granted.

Breach of Common Law Duty of Good Faith and Fair Dealing (Plaintiffs' Second Cause of Action)

Plaintiffs allege that defendants have breached a common law duty of good faith of fair dealing by, among other things, belatedly seeking payment refunds on the false pretense that they were erroneously or improperly paid, and that defendants have no right to withhold payments on undisputed and unrelated claims. Empire and Horizon counter that, because Plaintiffs fail to allege there was a breach any provision of the parties' provider agreements, a claim for breach of the implied covenant of good faith and fair dealing must fail because it cannot substitute for an unasserted or unsustainable breach of contract claim. Moreover, Empire and Horizon argue that, because the provider agreements expressly permit them to demand payment refunds or seek offsets against erroneously paid claims, there can be no independent tort claim for the implied covenant of good faith and fair dealing.

Implied in every contract is a covenant of good faith and fair dealing. Guggenheimer v Bernstein Litowitz Berger & Grossmann LLP, 11 Misc 3d 926, 810 NYS2d 880, 886 (Sup Ct, NY County 2006), citing Dalton v Educational Testing Serv., 87 NY2d 384 (1995). The covenant requires that the parties will not take any action which may have the effect of destroying the rights of the other party to receive the benefits of the contract. 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, supra. A determination of bad faith or willful or negligent disregard of the rights of the other party is generally a question of fact. Pernet v Peabody Engineering Corp., 20 AD2d 781 {1st Dept 1964}.

In Wallace v Merrill Lynch Capital Services, Inc., 10 Misc 3d 1062(A), 2005 WL 3487809 (Sup Ct, NY County Dec. 14, 2005), affd., AD3d , 2006 WL 1319826 (1st Dept. May 16, 2006), the plaintiff sued Merrill Lynch for, among other things, breach of the implied covenant of good faith and fair dealing. Plaintiff alleged that defendant breached the covenant by purchasing deeply discounted bonds (with a face value equal to the debt owed by defendant to plaintiff, but at a purchase price that was a fraction of the face value of the bonds) to offset the debt to plaintiff. Defendant moved to dismiss, arguing that the parties' agreement provided it with a setoff right, and there could be no violation of the implied covenant because it acted pursuant to an express provision of the agreement. I held that, "[e]ven if Merrill Lynch had a [contractual] right to setoff their debt with an obligation of equal value, it presents a question of fact as to whether attempting to setoff the debt with distressed securities was either in bad faith or a willful or negligent disregard of the rights' [of plaintiff] under the Agreement." Id. at *6. Because the plaintiff's allegations, "if accepted as true, supports a valid theory of liability based on breach of the implied covenant of good faith and [*6]fair dealing," I denied defendant's motion to dismiss. Id. at *5.[FN5]

Similarly, in Richbell Info. Serv., Inc. v Jupiter Partners, LP, 309 AD2d 288, supra, the First Department rejected an argument that the implied covenant of good faith could not create new duties that negate explicit rights under the parties' contract. The Court observed:

We recognize that there is clearly some tension between, on the one hand, the imposition of a good faith limitation on the exercise of a contract right, and on the other, the avoidance of using the implied covenant of good faith to create new duties that negate the explicit rights under a contract. However, the allegations here clearly go beyond claiming only that [defendant] exercised a right malevolently, for its own gain as part of a purposeful scheme designed to deprive plaintiffs of the benefits of the joint venture ... These allegations do not create new duties that negate [defendant's] explicit rights under a contract, but rather, seek imposition of an entirely proper duty to eschew this type of bad faith targeted malevolence in the guise of business dealings.

Id. at 302. This observation is based on the axiom that "even an explicitly discretionary contract right may not be exercised in bad faith so as to frustrate the other party's rights to the benefit under the agreement." Id. (citations omitted).

In the instant case, the complaint contains detailed allegations which, if accepted as true, may demonstrate that defendants, in bad faith or for an improper purpose, and after a significant delay, objected to the payments made to plaintiffs as mistaken or improper, sought refund of the payments, and withheld payments on disputed and unrelated claims or setoff of the paid amounts against future payments. If the allegations are true, plaintiffs may have been wrongfully deprived of the fruits of their services and the benefits of the provider agreements. New York University v Continental Ins. Co., 87 NY2d 308 (1995) (processing claims in bad faith and refusing to pay claims might breach implied covenant of good faith and fair dealing).

A motion to dismiss should be granted only when, even viewing the allegations as true, a plaintiff still cannot establish a cause of action. Here, plaintiffs have stated a viable claim for breach of an implied covenant of good faith and fair dealing.

Promissory Estoppel (Plaintiffs' Third Cause of Action)

In the complaint, plaintiffs allege that defendants made promises to Dr. Gross "in clear and unambiguous terms that defendants would pay him and his practice for Sonocur treatments rendered and billed under CPT 50590", and "plaintiffs reasonably and foreseeably relied upon defendants' promises to their detriment." Thus, plaintiffs aver that defendants should be "estopped [*7]from seeking refund of the monies reimbursed to [plaintiffs.]" Complaint ¶¶ 73 - 75.

To establish a cause of action based on promissory estoppel, a plaintiff must allege (1) an oral promise that is sufficiently clear and unambiguous, (2) reasonable reliance on the promise, and (3) an injury caused by the reliance. Knight Sec. L.P. v Fiduciary Trust Co., 5 AD3d 172 (1st Dept 2004).

The complaint contains allegations that the oral promises made by defendants were "clear and unambiguous." However, other statements in the complaint appear to undermine or refute these conclusory allegations. For instance, on the one hand, plaintiffs allege that "Dr. Gross had specifically requested written authorizations from defendants to confirm the verbal approvals," but on the other hand, plaintiffs concede that defendants had repeatedly refused to provide written authorization to confirm the alleged approvals. Complaint ¶¶ 24, 25.

In light of the foregoing, the alleged oral promises were far from "clear and unambiguous," and as such, it is doubtful that plaintiffs' alleged reliance upon such promises was reasonable. Knight Sec. L.P. v Fiduciary Trust Co., 5 AD3d at 173 (reasonableness of plaintiff's reliance implicates factual issues whose resolution would be inappropriate at this early stage, but an exception might be appropriate if representations were contradicted by a written agreement)(internal quotation marks omitted). In this case, defendants' refusal to provide written confirmations, despite repeated requests that same be provided, contradicts or undermines the purported verbal approvals and the reasonableness in relying upon such approvals. Moreover, because plaintiffs had been paid and they have not refunded the prior payments to defendants, plaintiffs do not appear to have suffered an injury based on the alleged reliance. Further, as discussed above in connection with the "account stated" claim that seeks to estop defendants from demanding refunds, the promissory estoppel claim is tantamount to seeking a declaratory judgment for similar relief. For the reasons stated above, and because plaintiffs have not met all of the elements of a promissory estoppel claim, this cause of action is dismissed.

Negligent Misrepresentation (Plaintiffs Fourth Cause of Action)

Plaintiffs allege that defendants' representations were made negligently to induce plaintiffs to provide the Soncour-ESWT treatments to patients and to believe that they could bill for such services under code 50590. As a result, plaintiffs allege they suffered damages in relying upon such misrepresentations.

Where fraud or misrepresentation is alleged in a complaint, a plaintiff is required, under CPLR 3016(b), to plead in detail so as "to clearly inform the defendant with respect to the incident complained of and give notice of the allegations the plaintiff intends to prove ...." Fort Ann Central School District v Hogan, 206 AD2d 723, 724 (3d Dept 1994), citing Lanzi v Brooks, 43 NY2d 778 (1977). Defendants contend, among other things, that the complaint fails the heightened requirement of CPLR 3016(b) because it fails to plead, with particularity, facts supporting the alleged misrepresentations.

Of course, the Court of Appeals has noted that the heightened requirement of the rule "is not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud [or misrepresentation][internal quotation marks omitted]." Lanzi v Brooks, 43 NY2d at 780. Therefore, I will assume, arguendo, that the complaint contains sufficient information to inform defendants of [*8]the allegation charged, and construe the complaint liberally in favor of plaintiffs in the face of a motion to dismiss.

However, even with such favorable assumption and construction, it is well settled that a breach of contract claim cannot be considered a tort claim sounding in misrepresentation unless there is a legal duty independent of the contract that has been violated by the defendant. Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382 (1987). Therefore, the lack of a separate and independent duty owed to a plaintiff distinct from the contract precludes a claim for negligent misrepresentation. Kimmell v Schaefer, 89 NY2d 257 (1996) (to establish liability for negligent misrepresentation arising out of a commercial transaction, the defendant must possess unique or specialized expertise, or be in a special position of trust and confidence with the plaintiff); Sergeants Benevolent Ass'n Annuity Fund v Renck, 19 AD3d 107 (1st Dept 2005).

Plaintiffs argue that they need not establish special duty or relationship, and contractual privity is sufficient to sustain a negligent misrepresentation claim; however, the Court of Appeals has observed that "liability for negligent misrepresentation has been imposed only on those persons [professionals such as lawyers, engineers, accountants, etc.] who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified." Kimmell v Schaefer, 89 NY2d at 264.

Here, plaintiffs do not allege, nor could they, that there is a special relationship of trust or confidence with defendants. Thus, plaintiffs have not set forth a requisite element for a viable claim for negligent misrepresentation, and the motions to dismiss this claim are granted. Moreover, plaintiffs' request to replead this claim is denied because, among other things, this claim cannot be saved by repleading as plaintiffs cannot allege the existence of any special relationship or trust with defendants.

Tortious Interference With Business Relations (Plaintiffs' Fifth Cause of Action)

Plaintiffs allege that defendants' purported conduct has interfered with their relationships with patients, and as a result, plaintiffs have suffered damages.

In New York, to establish a claim based on tortious interference with business relations, a plaintiff must show (1) existence of a business relation with a third party, (2) defendant's interference with the relation by use of dishonest, unfair or improper means, and (3) plaintiff sustained damages. See e.g. Fonar Corp. v Magnetic Resonance Plus, Inc., 957 F Supp 477, 481-482 (SD NY 1997); M.J. & K. Co., Inc. v Matthew Bender & Co., Inc., 220 AD2d 488, 490 (2nd Dept 1995).

This cause of action must be dismissed on several grounds. First, plaintiffs do not specifically identify which business relations defendants have interfered with, other than a general allegation that their business relations with patients have suffered. Complaint ¶¶ 85 - 87. Schoettle v Taylor, 282 AD2d 411 (1st Dept 2001) (claim for tortious interference dismissed because plaintiffs failed to allege any specific business relationship). More importantly, the complaint does not allege that defendants directly interfered with plaintiffs' patients; instead, it alleges that defendants' actions were directly at plaintiffs themselves rather than their patients. Carvel Corp. v Noonan, 3 NY3d 182, 192 (2004)("conduct constituting tortious interference with business relation is, by definition, conduct directed not at the plaintiff itself, but at the party with which the plaintiff has or seeks to [*9]have a relationship"); G.K.A. Beverage Corp. v Honickman, 55 F3d 762 (2d Cir 1995)(tortious interference claim dismissed because the alleged conduct was not directed at plaintiff's customers). Therefore, the motions to dismiss this claim are granted, and plaintiffs' request to replead this claim is denied.

Civil Conspiracy (Plaintiffs' Sixth Cause of Action)

Plaintiffs allege that defendants, acting in concert, shared information about plaintiffs' billings for the Sonocur-ESWT procedures and challenged such billing years after they had been paid, and that such actions constitute civil conspiracy.

In New York, "there is no independent cause of action for civil conspiracy." Bronx-Lebanon Hospital Center v Wiznia, 284 AD2d 265, 266 (1st Dept 2001); Empire State Building Assocs. v Trump, 247 AD2d 214 (1st Dept 1998) (civil conspiracy is "not recognized as a substantive tort in this State"). However, "[w]hile there is no cognizable action for a civil conspiracy, a plaintiff may plead conspiracy in order to connect the actions of the individual defendants with an actionable underlying tort and establish that those actions flow from a common scheme or plan." American Preferred Prescription, Inc. v Health Management, Inc., 252 AD2d 414, 416 (1st Dept 1998), citing Smukler v 12 Lofts Realty, Inc., 156 AD2d 161 (1st Dept 1989).

Plaintiffs acknowledge the law with respect to a claim for civil conspiracy, and concede that the viability of such claim is tied to other underlying tort claims asserted in the complaint - more specifically, the claims of tortious interference of business relations, defamation per se, and deceptive practices under New York General Business Law § 349.

However, as discussed, the tortious interference of business relations claim has been dismissed. Moreover, as explained below, the defamation per se and deceptive practices claims are also dismissed. Because the civil conspiracy claim cannot stand as an independent tort, the motions to dismiss this claim are granted.

Defamation Per Se (Plaintiffs' Seventh Cause of Action)

Plaintiffs allege that defendants' improper sharing of information (suggesting that plaintiffs' billing practices were improper or fraudulent), involved statements, when published, that were "intended to humiliate plaintiffs in the medical and insurance communities", and "such false statements ... caused injury to plaintiffs' business and ability to earn a living." Complaint ¶¶ 94, 95.

The elements of a defamation claim are "a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se." Dillon v City of New York, 261 AD2d 34, 38 (1st Dept 1999), quoting Restatement (Second) of Torts ¶558. Moreover, CPLR 3016(a) provides that in an action for defamation, "the particular words complained of shall be set forth in the complaint, but their application to the plaintiff may be stated generally." Furthermore, caselaw holds that the complaint must also allege the time, place and manner of the false statement and specify to whom it was made. Vardi v Mutual Life Ins. Co., 136 AD2d 453, 455 (1st Dept 1988) (claim alleging defamation was insufficient because it failed to particularize the specific words uttered). Thus, it is evident that the cause of action for defamation per se must be dismissed: The complaint fails to identify the defamatory statement with particularity, [*10]as required by CPLR 3016(a). It also fails to specify the time, place and manner of such statement, as well as identify the parties to whom it was allegedly published. Instead, the complaint only alleges, in general terms, that defendants improperly "shared" information with one another "suggesting that plaintiffs' billing practices were improper and, in some cases even suggesting that they were intentionally fraudulent". Complaint ¶ 94.

While plaintiffs argue that the elements of a defamation per se are different from those of a general defamation claim, they do not explain that difference. With a defamation per se claim, the plaintiff need not plead "special damages" in detail. Ithaca College v Yale Daily News Publishing Co., Inc., 85 AD2d 817, 818 (3d Dept 1981). This , of course, does not save this cause of action. Therefore, the motions to dismiss this claim are granted, and plaintiffs' request to replead this claim is denied.

Violation of New York General Business Law § 349 (Plaintiffs' Ninth Cause of Action)

Plaintiffs allege that defendants have engaged in deceptive acts and practices by giving initial pre-approvals for treatment and paying claims, and requiring plaintiffs to refund the paid amounts years later. Plaintiffs further allege that such deceptive acts and practices for claims administration have a "direct and adverse impact upon the general public both as to doctors attempting to navigate the morass of the managed health care system and also as to their patients." Because of this, plaintiffs allege that defendants have violated New York General Business Law § 349, and that they have suffered damages. Complaint ¶¶ 103-107.

General Business Law § 349 prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce which have a broad impact on consumers at large [internal quotation marks omitted]." Four Winds of Saratoga, Inc. v Blue Cross and Blue Shield of Central New York, Inc., 241 AD2d 906, 907 (3d Dept 1997). The statute also requires the plaintiff to show injury "by reason of defendants' acts and practices [emphasis in original]." Medical Society of the State of New York v Oxford Health Plans, Inc., 15 AD3d 206, 207 (1st Dept 2005). In Medical Society, plaintiff, on behalf of its member physicians, sought to enjoin defendant healthcare insurers from engaging in acts and practices that have allegedly harmed plaintiff's members as having joined defendants' network of physicians. In holding that plaintiff did not have a cause of action under § 369, the First Department stated that plaintiff must show that defendants' alleged acts and practices were "consumer oriented" and that "consumers" were "those who purchased goods and services for personal, family or household use." Id. at 207. Because defendants' acts and practices were "directed at physicians, not consumers", the First Department denied plaintiff's request for relief. Id.; see also The Northwestern Mutual Life Ins. Co. v Wender, 940 F Supp 62, 65 (SD NY 1996). . While acknowledging the legal elements required for a § 349 claim, plaintiffs attempt to align the instant case with Greenspan v Allstate Ins. Co., 937 F Supp 288 (SD NY 1996), where the federal district court noted, in dicta, that an insurer's settlement of healthcare providers' claims is "not inherently consumer-oriented", but the court may consider "the amount of the claim, the relative sophistication and bargaining power of the parties, and whether the policy was standard or negotiated in determining whether an insurer's allegedly deceptive conduct is within 349's scope." Id. at 294. The Greenspan case, however, involved Allstate's no-fault insurance claims settlement practices that impacted many physicians and policyholders. Moreover, as Greenspan observed, no-fault insurance law was enacted to institute "an inexpensive, efficient method of compensating accident victims" [*11]and "erecting barriers to reimbursement and imposing additional social costs may frustrate the objective and harm the public." Id. at 294.

The facts of the instant case are distinguishable. The complaint does not state facts that show a wide-ranging impact upon the public consumers as a result of defendants' alleged acts and practices. Instead, it only contains a conclusory allegation that the claims administration practices of defendants "have a direct and adverse impact upon the general public both as to doctors attempting to navigate the morass of the managed health care system and also as to their patients." Complaint ¶ 105. For this reason, the § 349 claim must be dismissed

Declaratory Judgment (Plaintiffs' Tenth Cause of Action)

Plaintiffs seek a declaratory judgment that provides, among other things, that defendants "have breached their obligations, wronged plaintiffs, and are foreclosed from demanding return of monies paid to [plaintiffs]; and from applying such coercive tactics to plaintiffs and all other providers, including denying or refusing to consider his ongoing claims ...." Complaint ¶ 110.

The declaratory judgment claim must be dismissed for several reasons. First, this claim is essentially duplicative of the other claims asserted in the complaint, and dismissal is appropriate under the circumstance. Josephs v Bank of New York, 302 AD2d 318, 319 (1st Dept 2003) ("[d]ismissal of the declaratory judgment action was also warranted by the circumstance that it was duplicative of plaintiff's [other] action, [as] the two actions involving substantially the same parties, issues and underlying facts") (citations omitted).

In addition, as discussed above in connection with the "account stated" and "promissory estoppel" claims, the principal relief sought by the declaratory judgment claim is to estop or foreclose defendants from demanding refunds of the amounts paid to plaintiffs, and to a lesser extent, from withholding or offsetting the paid amounts against ongoing and future claims unrelated to the Sonocur-ESWT claims. As to the declaratory relief to estop defendants from demanding refunds (based on affirmative defenses), this is premature because defendants have yet to commence legal actions seeking repayments. See Employers' Fire Ins. Co. v Klemons, 229 AD2d 513, 514 (2nd Dept 1996) (declaration that affirmative defense is available before commencement of action is purely advisory).

As to a declaratory relief against defendants for exercising setoff or withholding rights, the complaint alleges that defendants either have started to withhold payments on unrelated claims or forced plaintiffs to go through a time-consuming process for each and every claim. Because defendants have neither allowed or denied such claims, the granting of any declaratory judgment is premature. Employers' Fire Ins. Co., 229 AD2d at 514 (because insurer has neither allowed nor denied claim, there was no "justiciable controversy to justify commencement of a declaratory judgment action"); Combustion Engineering, Inc. v Travelers Indem. Co., 53 NY2d 875, 876 (1981) ("court was without jurisdiction to entertain the action since the request for declaratory judgment was premature").

Accordingly, it is

ORDERED that the motions are granted to the extent of dismissing the first (account stated), third (promissory estoppel), fourth (negligent misrepresentation), fifth (tortious interference with business relations), sixth (civil conspiracy), seventh (defamation per se), ninth (deceptive practices under New York General Business Law § 349), and tenth (declaratory judgment) causes [*12]of action, and are otherwise denied; and it is further

ORDERED that plaintiffs' request for leave to replead the fourth (negligent misrepresentation), fifth (tortious interference with business relations) and seventh (defamation per se) causes of action is denied; and it is further

ORDERED that Empire and Horizon shall each serve its answer to the complaint within twenty (20) days of service of a copy of this Order with notice of entry.

Dated: May 18, 2006ENTER:

_________________

J.S.C. Footnotes

Footnote 1:Plaintiffs, Guardian and HIP have executed stipulations of discontinuance. Cigna, however, has not moved to dismiss or settled this litigation.

Footnote 2:It appears that code 50590 is the billing code for treatment of kidney and gall stones, and codes 0019T and 0020T are for treatment involving the musculoskeletal system and plantar fascia. The complaint alleges that several major insurers (who are not defendants in the instant action) informed plaintiffs that they would pay for the Sonocur-ESWT procedures and plaintiffs could use code 50590 for billing.

Footnote 3:In their motions, Empire and Horizon contend that, because their respective provider agreements with plaintiffs expressly authorize the insurer to seek refund for medical services that are not covered or not due to be paid under the agreement (or for monies that were erroneously or improperly paid), plaintiffs' assertion that defendants should be estopped from exercising such contractual rights in demanding refund, or offsetting the amount of refund against future payments, is without merit.

Footnote 4:Empire and Horizon also contend that, the account stated claim is similar to, and thus duplicative of, the promissory estoppel claim that is denominated as the third cause of action in the complaint and, therefore, should be dismissed. This contention is addressed below.

Footnote 5:Also noted was that viability of the breach of the implied covenant of good faith and fair dealing claim "does not depend on the existence of any breach of an express provision of the Agreement." Id. citing Chase Manhattan Bank, N.A. v Keystone Distributors, Inc., 873 F Supp 808, 815 (SD NY 1994).