Pekler v Health Ins. Plan of Greater N.Y.

[*1] Pekler v Health Ins. Plan of Greater N.Y. 2008 NY Slip Op 50471(U) [19 Misc 3d 1102(A)] Decided on March 13, 2008 Supreme Court, Richmond County Minardo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 13, 2008
Supreme Court, Richmond County

Gerald Pekler, M.D., Marcelina Medrano, M.D., Nkanga Nkanga, M.D., Fanny Kasher, M.D., David Friedman, M.D., and Douglas Weiner, D.P.M., Plaintiffs,

against

Health Insurance Plan of Greater New York, Greater Staten Island Medical Group, P.C. d/b/a Staten Island Medical Group, Staten Island Physician Practice, P.C., and Pivot Health, LLC, Defendants.



102273/06

Philip G. Minardo, J.

Defendants, Health Insurance Plan of Greater New York (hereafter HIP), Staten Island Medical Group P.C. (hereafter SIMG), Staten Island Physician Practice P.C. (hereafter SIPP) and Pivot Health LLC (hereafter Pivot) each move by notice of motion (Motion Nos. 2956, 2957, 2960 and 2978, respectively) to dismiss the causes of action pertinent to each in plaintiffs' second amended complaint on the grounds (1) that the complaint relative to each fails to state a cause of action and (2) a defense founded upon documentary evidence.

This litigation involves the loss of employment for each of the plaintiffs, all medical doctors, who were employed by SIMG based upon an agreement with HIP. SIMG was a professional corporation and medical group, whose primary purpose was to provide medical care to HIP members. Sometime in early 2006, SIMG's medical malpractice insurancer terminated its coverage. Consequently, HIP terminated its agreement with SIMG, which had been denominated as a participating provider for HIP. Five of the plaintiffs were employees and shareholders of SIMG . The sixth, Dr. Weiner, was an employee but not a shareholder. As is relevant, Pivot is a contractor that was hired to provide managerial, strategic, and business services to SIMG and HIP. Subsequent to the termination, SIPP was created as a new medical practice group, which thereafter entered into a contract with HIP to provide medical services to HIP members similar to those previously provided by SIMG. When plaintiffs were not offered employment by SIPP, the within litigation ensued.In assessing a motion to dismiss a cause of action pursuant to CPLR 3211(a)(7) where evidentiary material is adduced in support of the motion, the court must determine whether the proponent of the pleading has a cause of action, not whether he or she has stated one (see Meyer v Guinta, 262 AD2d 463, 464). "[B]are legal conclusions and factual claims which are flatly contradicted by the evidence are not presumed to be true on such a motion" (Palazzolo v. Herrick, Feinstein, LLP, 298 AD2d 372, 372). Accordingly, if, e.g., documentary proof disproves an essential allegation of the complaint, a dismissal is warranted pursuant to CPLR 3211(a)(7) even if the allegations, standing alone, could otherwise withstand a motion to dismiss for failure to state a cause of action (see McGuire v. Sterling Doubleday Enters, LP, 19 AD3d 660, 661, lv denied 7 NY3d 701).

Plaintiffs' first cause of action alleges that defendants, acting together, tortiously interfered with plaintiffs' current and prospective business relationships with the patient-members of HIP. Tortious interference with prospective business relations "applies to those situations where the third-party would have entered into or extended a contractual relationship [*2]with plaintiff but for the intentional and wrongful acts of the defendant" ( see WFB Telecommunications v. NYNEX Corp., 188 AD2d 257 257, lv denied 81 NY2d 709). In such an action, the alleged tortfeasor must be shown to have used unlawful means to achieve said result, or that the interference was done intentionally, maliciously, and without excuse or justification. The burden of proof on this issue lies with the plaintiff (see Datlow v Paleta Intl. Corp., 199 AD2d 362, 363; see John R. Loftus, Inc. v White, 150 AD2d 857, 860; see also 72 NY Jur 2d, Interference, § 44). In this case, plaintiffs allege that HIP together with the other defendants repeatedly failed to act upon pending pre-approval requests for plaintiffs' medical services; advised patients that such pre-approvals would be significantly delayed; and "intentionally, knowingly and maliciously failed to provide plaintiffs with the results of medical tests for their patients", which precluded plaintiffs from discussing the results with their patients (Second Amended Complaint, para 64[f]). On this issue, plaintiffs place principal reliance on two cases from the Southern District of New York,Mahmud v. Kaufman, (454 F Supp 2d 150 [SDNY 2006]) and Excellus Health Plan Inc. v. Tran (287 F. Supp 2d 167, 177 et seq.[SDNY 2003]). Such reliance is misplaced.

In each of the cited cases, it was specifically claimed that the alleged tortfeasor interfered directly with claimant's prospective business relationships, e.g., by engaging in some direct conduct towards the third-party that convinced him or her to forgo the relationship. Moreover, the degree of interference required to demonstrate tortious interference with a prospective business relationship is relatively high (Excellus HealthPlan, Inc. v. Tran, 287 F Supp 2d at 177). Thus, in order to be actionable, the alleged interferer must engage directly in some relevant activity toward the third-party "and convince [it] not to enter into a business relationship with plaintiff"(Donar Corp. v. Magnetic Resonance Plus, 957 F Supp 477, 483 [SDNY 1997]). At bar, plaintiffs allegations of interference with prospective patients are not only lacking in factual support, but the complaint as a whole does not plead the requisite direct connection between defendants' activities and, e.g., the loss of new patients, required to sustain the cause of action. Equally without factual basis are plaintiffs' allegations of malice (see John R. Lofts Inc. v. White, 150 AD2d at 860). Accordingly, plaintiffs' first cause of action is dismissed as to each defendant.

Plaintiffs' second and eleventh causes of action against defendants Pivot, SIPP and HIP allege that each of these defendants tortiously interfered with the shareholder agreements between themselves and SIMG. According to paragraph 75 of the second amended complaint, those shareholder agreements constituted contracts between the shareholder-plaintiffs and SIMG.In order to state a cause of action for tortious interference with contract, a plaintiff must allege, inter alia, that defendant intentionally induced a third party to breach a known contract with plaintiff, or otherwise render performance impossible (see Krones, Inc. v AIX Corp., 81 NY2d 90, 94; Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 189-190; Home Town Muffler v. Cole Muffler, 202 AD2d 764, 766). More specifically, plaintiff must allege that the contract would not have been breached "but for" defendant's wrongful conduct (see Israel v. Wood Dobson Co., 1 NY2d 116, 120; Pyramid Brokerage Co. v. Citibank [NY State], 145 AD2d 912; Key Bank of N. NY v. Lake Placid Co., 103 AD2d 19, app dismissed 64 NY2d 644). Although on a motion to dismiss pursuant to CPLR 3211 (a) (7) "the [narrow] question presented for review is not whether plaintiffs should ultimately prevail in [the] litigation, but [is] limited...to...the sufficiency of [the] complaint" (Becker v. Schwartz, 46 NY2d 401, 408), in order to withstand dismissal, the pleading can neither be vague nor conclusory (see Washington Ave. Assoc. v. Euclid Equip., 229 AD2d 486; O'Riordan v Suffolk Ch., Local No. 852, Civ. Serv. Empls. Assn., 95 AD2d 800, lv denied 60 NY2d 559). Here, inasmuch as the second and eleventh causes of action wholly fail to state the manner in which SIPP, HIP or Pivot acted intentionally to procure the breach of any of plaintiffs' employment and /or shareholder agreement with SIMG, the second and eleventh causes of action must be dismissed.

Somewhat similarly, plaintiff's third cause of action sounding in defamation against defendant SIMG, Pivot and SIPP must be dismissed. Defamation is a false statement, published [*3]to a third party without privilege or authorization "that tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or to induce an evil opinion of him [or her] in the minds of right-thinking persons, and to deprive him [or her] of their friendly intercourse in society" (Manfredonia v. Weiss, 37 AD3d 286, 286; see Salvatore v. Kumar, 45 AD3d 560; Dillon v City of New York, 261 AD2d 34). In this case, the complaint alleges that SIMG's Chief Medical Officer and Chief Operating Officer, acting on behalf of both SIMG and Pivot, announced in an article published in the Staten Island Advance on March 25, 2006, that certain physicians from SIMG were separating from the group, impliedly due to deficient work performance (see Plaintiffs' Exhibit "3"). However, no physicians are identified by name in the article, and plaintiffs have failed to plead any factual basis on which the readers would be able to discern from its contents that the statements in question were made "of and concerning" these plaintiffs (Springer v. Viking Press, 60 NY2d 916, 917). Hence, no defamation has been stated. Moreover, since the article was published while plaintiffs were still employed by SIMG, there was no way for the readers to identify plaintiffs as the individuals upon whom doubt was cast (cf. DiBlasio v. North Shore Hosp 213 AD2d 584).

Plaintiff's fourth and sixth causes of action are for an accounting, and are maintainable only against defendant SIMG. In fact, plaintiffs have failed to allege any relationship with SIPP or Pivot which would to entitle them to either an accounting or an inspection of the latters' corporate books and records, whether at common-law or pursuant to Business Corporation Law §624.

Plaintiff's fifth cause of action sounds in quantum meruit. In order to establish a claim in quantum meruit, a claimant must establish (1) the performance of the services in good faith, (2) the acceptance of those services by the person to whom they were rendered, (3) an expectation of compensation therefor, and (4) the reasonable value thereof (see Ross v DeLorenzo, 28 AD3d 631). Here, plaintiff's allege in paragraph 64 of their second amended complaint that in or about April 2006, they were told by agents of SIMG, Pivot and /or HIP that for a ninety-day period commencing on May 1, 2006, they would be permitted to provide follow-up care to their patients who were HIP members. Based upon these representations, plaintiffs claim that they continued in good faith to treat the HIP patients through July 31, 2006, but were not paid for their services. In opposition, SIMG. argues that no cause of action in quantum meruit exists inasmuch as an express contract for compensation existed between plaintiffs and SIMG (see Tako Holdings , Inc. v. Tillman 272 AD2d 394, lv denied 95 NY2d 770).

It is well established that where, as here, there is a bona fide dispute as to the existence of a contract, or where it is argued that the contract does not cover the dispute in issue, a plaintiff will not be required to elect his or her remedy, and may proceed under both theories (see Old Salem Dev. Group, v. Town of Fishkill, 301 AD2d 639; Sforza v Health Ins. Plan, of Greater NY, 210 AD2d 214). Accordingly, and in the absence of proof to the contrary, plaintiffs' further allegation that they were precluded from performing services for SIMG effective May 1, 2006, prompts this Court to allow the cause of action in quantum meruit to proceed, for now, as against HIP and SIMG. However, there is no factual basis for plaintiffs' cause of action in quantum meruit against Pivot.

In their seventh cause of action, plaintiffs allege the breach of valid shareholder and/or employment agreements between themselves and SIMG or its "alter ego" SIPP, Thus, plaintiffs allege, inter alia, that each of them has fully performed his or her obligations under both the shareholder and/or employment agreements, and that each has been deprived of the rights, benefits and compensation they were due thereunder. While SIMG argues that the undisputed failure to dissolve the P.C. precludes the within causes of action as a matter of law, it is the opinion of this Court that since the agreements between plaintiffs and the undissolved P.C. have not been abrogated, they may maintain a cause of action for their breach. As to SIPP, while it is claimed that it is a separate entity formed to benefit patients, "not to [act] unjustly toward or harm the plaintiffs", it is undisputed that SIPP (1) commenced operations in the same office and with the same officers as SIMG, (2) utilized the same medical and office equipment as SIMG, [*4]and (3) assumed control of the cash accounts and accounts receivable of SIMG. In the opinion of this Court, these uncontroverted allegations are sufficient at this stage of the proceedings to allow plaintiffs' seventh cause of action to stand as against SIPP (see Cherkasets v. Gordon, 21 AD3d 856). Undoubtedly, many of the details regarding the relationship, if any, between SIMG and SIPP presently remain beyond plaintiffs' ken. For these same reasons, dismissal of the tenth cause of action relating to the alleged breach of Dr. Weiner's employment agreement would be premature while discovery remains incomplete (see CLR 3211[d]).

Plaintiffs' eighth and ninth causes of action are predicated on HIP's alleged violation of Public Health Law §4406-d (2), which prohibits a health care plan from terminating its contract with a health care professional without first providing (1) a written explanation of the reasons for the proposed contract termination, and (2) an opportunity to be heard. Here, in support of dismissal, HIP asserts that no contract existed between itself and plaintiffs, and that even if it did, said contract provided that it could be terminated for cause. In opposition, plaintiffs point to paragraph 20 of the second amended complaint, which alleges that each plaintiff was authorized to participate in HIP's network of providers, and that each plaintiff had a contract with HIP. In support, plaintiffs annex, as a sample, a copy of the agreement between HIP and Dr. Weiner (see Plaintiff's Exhibit "A"). While a better evidentiary showing could have been made by plaintiffs on this issue, they were not obligated to lay bare their proofs in opposition to defendants' motions. Moreover, the conflicting evidence as to the existence of such contracts is sufficient withstand HIP's motion to dismiss plaintiffs' eighth and ninth causes of action against it (cf. Meyer v. Guinta, 262 AD2d 463, supra).

Accordingly, it is hereby

ORDERED that the motion to dismiss of defendant HIP is granted as to the first, second, fourth, sixth and eleventh causes of action in plaintiffs'second amended complaint, and said causes of action as to this defendant are hereby severed and dismissed; and it is further

ORDERED that the like motion of defendant SIMG is granted as to the first and second causes of action in plaintiffs' second amended complaint, and said causes of action as to this defendant are hereby severed and dismissed; and it is further

ORDERED that the like motion of defendant SIPP is granted as to the first, second, third, fourth, sixth and eleventh causes of action in plaintiffs' second amended complaint, and said causes of action as to this defendant are hereby severed and dismissed; and it is further

ORDERED that the motion to dismiss by defendant Pivot is granted in its entirety, and the complaint as to this defendant is hereby severed and dismissed; and it is further

ORDERED that the balance of the motions are denied, and it is further

ORDERED that the Clerk of the Court enter judgment accordingly.

ENTER,

s/ Philip G. Minardo

J.S.C.

DATED: March 13, 2008

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