FILED: NEW YORK COUNTY CLERK 05/02/ :08 PM INDEX NO /2016 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 05/02/2017

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK DEMOND MOORE and MICHAEL KIMMELMAN, P.C. v. Plaintiffs, CIOX HEALTH LLC and NYU HOSPITALS CENTER, Defendants. Index No /2016 ASSIGNED JUDGE Hon. Nancy Bannon Motion Seq. No. 001 MEMORANDUM OF LAW IN OPPOSITION TO NYU HOSPITALS CENTER S MOTION TO DISMISS MOTLEY RICE LLC William H. Narwold Mathew P. Jasinski 20 Church Street, 17th Floor Hartford, CT (860) (860) (fax) bnarwold@motleyrice.com mjasinski@motleyrice.com New York Office 600 Third Avenue, Suite 2101 New York, NY (212) Attorneys for Plaintiffs 1 of 12

2 TABLE OF CONTENTS TABLE OF CONTENTS... I TABLE OF AUTHORITIES... II I. INTRODUCTION... 1 II. FACTUAL ALLEGATIONS... 2 III. LEGAL STANDARD... 3 IV. ARGUMENT... 4 A. Late service should be excused under CPLR 205(a) in the interest of justice B. Plaintiffs properly state a cause of action for Defendants violations of GBL C. Plaintiffs bring no claim against NYUHC for unjust enrichment... 8 V. CONCLUSION... 8 i 2 of 12

3 TABLE OF AUTHORITIES Cases Ellington v. Consolidated Edison, Inc., 2008 N.Y. Misc. LEXIS 9177, 2008 N.Y. Slip Op (U) (Sup. Ct., N.Y. Cnty 2008)... 5 Feder v. Staten Island Univ. Hosp., Index No /99 (Sup. Ct., N.Y. Cnty Nov. 30, 1999)... 7 In re Coordinated Title Ins. Cases, 2 Misc. 3d 1007 [A], 2004 NY Slip Op 50171[U], (Sup. Ct., Nassau Cnty 2004)... 7 Leader v. Maroney, 97 N.Y.2d 95 (2001)... 4 MacDonell v. PHH Mortg. Corp., 45 A.D.3d 537 (2d Dep t 2007)... 3 Marinelli v. Sroka, 8 Misc. 3d 863 (Sup. Ct., Nassau Cnty 2005)... 4, 5 McCracken v. Verisma Sys., 131 F. Supp. 3d 38 (W.D.N.Y. 2015)... 8 Oswego Laborers Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (1995)... 6, 7, 8 Pyne v. 20 E. 35 Owners Corp., 267 A.D.2d 168 (1st Dep t 1999)... 4 Spiro v. HealthPort Techs., LLC, 73 F. Supp. 3d 259 (S.D.N.Y. 2014)... passim Winston v. Freshwater Wetlands Appeals Bd., 224 A.D.2d 160 (2d Dep t 1996)... 5, 6 Statutes CPLR , 5 CPLR 205(a)... 1, 4, 5 CPLR 306-b... 4, 5 CPLR 3211(a)(5)... 3 CPLR 3211(a)(7)... 3 ii 3 of 12

4 Gen. Bus. Law , 6, 7, 8 Gen. Bus. Law 349(a)... 6 Pub. Health Law passim Pub. Health Law 18(1)(g)... 2 Pub. Health Law 18(2)(d)... 1 Pub. Health Law 18(2)(e)... 1, 2, 7 iii 4 of 12

5 I. INTRODUCTION The gravamen of this lawsuit is that IOD Incorporated ( IOD ), as an agent of NYU Hospitals Center ( NYUHC ) and other healthcare providers in New York, violated Section 18 of New York s Public Health Law ( PHL ) by uniformly charging Plaintiffs $0.75 per page for copies of medical records even though PHL 18 expressly forbids IOD from charging Plaintiffs more than its costs incurred. Section 18 obligates healthcare providers in New York to furnish copies of patient information (i.e., medical records) to qualified persons upon request. PHL 18(2)(d). Under Section 18, a health care provider may impose a reasonable charge for all inspections and copies, not exceeding the costs incurred by such provider.... PHL 18(2)(e) (emphasis added). That is, a provider may not profit from making copies of patient medical records. [Section 18] makes $0.75 a cap on costs; it does not grant authority to a healthcare provider to bill in excess of its actual costs and thereby turn a profit on a patient s copying request. Spiro v. HealthPort Techs., LLC, 73 F. Supp. 3d 259, 273 (S.D.N.Y. 2014). Demond Moore ( Moore ) and Michael Kimmelman, P.C. ( Kimmelman ) (together, Plaintiffs ), seek to recover these excess charges on behalf of a putative class of qualified persons. Although Moore and Kimmelman bring claims against Defendant CIOX Health, LLC ( CIOX ), as the successor company to IOD, only Moore brings claims against NYUHC. CIOXX and NYUHC (together, Defendants ) seek dismissal. Defendant NYUHC s motion should be denied because (1) late service should be excused under CPLR 205(a) in the interest of justice and (2) Plaintiffs properly state a cause of action for a violation of GBL It also bears noting that neither Defendant challenges the sufficiency of Plaintiffs allegations 1 Plaintiffs do not contest the dismissal of their request to enjoin Defendants deceptive acts and practices in their prayer for relief. 1 5 of 12

6 under PHL 18. II. FACTUAL ALLEGATIONS Plaintiffs bring this class action on behalf of qualified persons who were overcharged by IOD for copies of medical records requested from New York health care providers, including NYUHC, in violation of PHL 18. (Class Action Compl. 2.) 2 IOD merged with Defendant CIOX making CIOX its legal successor liable for its conduct, debts and obligations. (Id. 3.) During the class period, IOD was a for-profit corporation. (Id. 8.) For purposes of Moore s allegations against NYUHC, the following facts are relevant. IOD, acting as an agent of health care providers in New York, fulfilled requests for medical records directed to those health care providers, including NYUHC. (Id. 42.) In October 2011, as part of a personal injury lawsuit, Moore, through his attorneys, Simonson Hess Leibowitz & Goodman, P.C. ( Simonson ), made a written request to NYUHC for copies of his medical records. (Id ) Both Moore, as NYUHC s patient, and Simonson, as the law firm representing Moore in the underlying personal injury action, were qualified person[s] under PHL 18(1)(g). (Id ) NYUHC forwarded the request for Moore s records to IOD and provided IOD with access to Moore s medical records. (Id. 59, 64.) IOD copied Moore s medical records on behalf of NYUHC (id ). Not content to recoup only the costs incurred for copies, as permitted by PHL 18(2)(e), IOD sought to reap a profit by uniformly charging the full statutory cap of $0.75 per page and pocketing the difference (id. 62, 67-68). Although Simonson paid the bill, Moore was obligated by his retainer agreement with Simonson to reimburse Simonson upon any recovery in his personal injury lawsuit. (Id ) Moore did, in fact, reimburse 2 A copy of the Class Action Complaint is attached as Exhibit A to the Affirmation of Jodyann Galvin in Support of Defendant NYU Hospitals Center s Motion to Dismiss ( Galvin Aff. ) (NYSCEF Doc. No. 8). 2 6 of 12

7 Simonson and, thus, was injured by IOD s policy of overcharging for copies of patients medical records. (Id ) Plaintiff Moore filed a complaint in federal court on October 21, (Galvin Aff. Ex. D.) Defendants moved to dismiss, in part, on the basis that the court lacked subject matter jurisdiction under the Class Action Fairness Act ( CAFA ), arguing that this case belonged in state court under the local controversy exception. (See Jasinski Aff. 3 Ex. A; accord id. Ex. B.) The district court agreed finding that the local controversy exception applied, and declined jurisdiction over the case on March 24, The district court expressly stated that its decision was without prejudice to Plaintiffs refiling their suit in an appropriate state court.... (See Mem. and Order at 17 (March 24, 2016), Galvin Aff. Ex. F.) The district court never reached the Defendants alternative arguments for dismissal. (Id. at 17.) Plaintiffs thereafter filed their Class Action Complaint on September 23, 2016 in New York Supreme Court, serving CIOX on December 12, 2016 and NYUHC on December 13, 2016, and, as to NYUHC, seeking to certify a sub-class from September 12, 2008 to December 31, (Class Action Compl. 18.) NYUHC moves to dismiss under CPLR 3211(a)(5) and 3211(a)(7). (NYUHC Mem. of Law in Supp. of Its Mot. to Dismiss ( NYUHC Mem. ) at 1.) III. LEGAL STANDARD On a motion to dismiss the complaint pursuant to CPLR 3211 (a)(7), the court must accept as true the factual allegations of the complaint and accord the plaintiff all favorable inferences which may be drawn therefrom [citations omitted]. If the plaintiff can succeed upon any reasonable view of the allegations, the complaint may not be dismissed. MacDonell v. PHH Mortg. Corp., 45 A.D.3d 537, 538 (2d Dep t 2007) (citations omitted). 3 Affirmation of Mathew P. Jasinski, Esq. in Opposition to NYU Hospitals Center s Motion to Dismiss, filed contemporaneously herewith. 3 7 of 12

8 IV. ARGUMENT On behalf of a sub-class of qualified persons who paid, or became obligated to pay, for copies of medical records from NYUHC, Moore brings two claims against NYUHC. First, NYUHC violated PHL 18 by overcharging qualified persons for copies of medical records. Second, NYUHC deceptively failed to disclose the actual costs incurred while simultaneously billing through IOD in excess of those costs. Both statutory claims are subject to a three-year statute of limitations. A. Late service should be excused under CPLR 205(a) in the interest of justice. NYUHC recognizes that CPLR 205 is a tolling provision that permits a plaintiff such as Moore, to refile the same action within six months while still relying on the original filing date. (NYUHC Mem. at 7.) NYUHC nevertheless argues this case must be dismissed because the newly filed action must be both commenced and served within six months. 4 (Id. at 7.) To be sure, although Plaintiffs timely commenced this lawsuit in state court on September 23, 2016 within six months of dismissal from federal court NYUHC was served on December 13, This was a mistake. Still, dismissal is not warranted. Although it is generally true that service must be effected within six months, Pyne v. 20 E. 35 Owners Corp., 267 A.D.2d 168, 169 (1st Dep t 1999), late service can be excused in a 205(a) action... in the interest of justice. Marinelli v. Sroka, 8 Misc. 3d 863, 866 (Sup. Ct., Nassau Cnty 2005) (citation omitted) (court excused service on defendant that was two and onehalf months late); see also Leader v. Maroney, 97 N.Y.2d 95 (2001) (late service under CPLR 306-b excused in interest of justice even though no showing of diligent effort at service). Other 4 CPLR 205 provides, in pertinent part, that [i]f an action is timely commenced and is terminated... the plaintiff... may commence a new action... within six months after the termination provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant is effected within such six-month period. 4 8 of 12

9 factors, such as notice to defendants and the merits of plaintiff s case may be considered. Marinelli, 8 Misc. 3d at 866 (citation omitted). Indeed, this is consistent with both the remedial nature of CPLR 205, Winston v. Freshwater Wetlands Appeals Bd., 224 A.D.2d 160, (2d Dep t 1996), and this Court s authority under CPLR 306-b to enlarge the period of time to effect service. See CPLR 306-b (the court upon good cause shown or in the interest of justice may extend the time for service ); see also Marinelli, 8 Misc. 3d at 867 (court extended time for service sua sponte despite fact plaintiff did not move in first instance). The restorative provisions of CPLR 205(a)... reflect[] the idea that a diligent litigant who commenced a timely action but who failed on some generally technical ground, deserves an adjudication on the merits. Winston, 224 A.D.2d at 164 (citation omitted). Equitable considerations militate against dismissal for at least four reasons First, the nature of the prior dismissal in federal court for lack of subject matter jurisdiction under CAFA was such that Defendants certainly were aware that Plaintiffs would continue to pursue their claims in state court, as the district court suggested, and would seek relief under CPLR 205(a). 5 Indeed, it was Defendants who sought dismissal from federal court, arguing that this was a local controversy. Second, Moore s meritorious claims compel excusing late service. Spiro, 73 F. Supp. 3d at 273 (Section 18 prohibits healthcare provider from billing in excess of its actual costs and making a profit on a patient s copying request). Third, Defendants point to no evidence that they would be prejudiced by the delay. (See 5 Upon review of the cases and the legislative history cited by NYUHC, Moore does not contest that, absent relief from the Court, 205 requires both commencement and service, but Moore s counsel believed that commencement alone was sufficient to stop the statute of limitations clock. See, e.g., Ellington v. Consolidated Edison, Inc., 2008 N.Y. Misc. LEXIS 9177, *12, 2008 N.Y. Slip Op (U) (Sup. Ct., N.Y. Cnty 2008) ( action is commenced by filing a summons and complaint, and is deemed, for Statute of Limitations purposes, to have been commenced when the summons and complaint are filed with the clerk of the court ). 5 9 of 12

10 generally NYUHC Mem. at 7-8.) Indeed, Defendants sought an extension of time to file their motions to dismiss, delaying the action further. Fourth, public policy counsels that cases should be heard on the merits. Winston, 224 A.D.2d at 164. For all of these reasons, the Court should not dismiss Moore s claims against NYUHC on timeliness grounds. B. Plaintiffs properly state a cause of action for Defendants violations of GBL 349. NYUHC argues that Plaintiffs do not allege an act or practice that is deceptive or misleading in a material way. (NYUHC Mem. at 13.) This argument is without merit. To state a claim under Section 349(a), plaintiffs must allege that the defendants acts are (1) directed to consumers and (2) deceptive or misleading in a material way, and that (3) plaintiffs have been injured by reason thereof. Spiro, 73 F. Supp. 3d at 274 (quoting Oswego Laborers Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, (1995)). NYUHC does not dispute the first and third elements. (NYUHC Mem. at 13.) Deceptive acts and practices are those likely to mislead a reasonable consumer acting reasonably under the circumstances. Oswego, 85 N.Y.2d at 26. Although a business need not guarantee that a consumer has all the relevant information, the scenario is quite different... where the business alone possesses material information that is relevant to the consumer and fails to provide this information. Id.; Spiro, 73 F. Supp. 3d at 274. Applying these principles to nearly identical facts, the Spiro court held that the failure to disclose that defendants actual cost of photocopying was below $0.75 per page states a cause of action under 349. Spiro, 73 F. Supp. 3d at 274. Without disclosure of such a cost differential, a fact known only to defendants, a reasonable consumer, appreciating that the statute permitted healthcare providers to charge up to $0.75 cents per page to recoup their actual costs, 6 10 of 12

11 could be misled to believe that defendants actual cost was $0.75 per page (or more). Id.; accord In re Coordinated Title Ins. Cases, 2 Misc. 3d 1007 [A], 2004 NY Slip Op 50171[U], *8-9 (Sup. Ct., Nassau Cnty 2004) (Section 349 claim where complaint involve[d] the conduct of the defendants in allegedly overcharging or failing to notify the members of the putative class of the availability of the mandated discounts ). NYUHC relies on the unpublished opinion, Feder v. Staten Island Univ. Hosp., Index No /99 (Sup. Ct., N.Y. Cnty Nov. 30, 1999), 6 aff d 273 A.D.2d 155 (1st Dep t 2000), which dismissed a 349 claim because the documentary evidence show[ed] that the allegedly unlawful charges were disclosed to plaintiffs before being paid. Id. at 16. In that case, however, the plaintiffs 349 claim rested upon generalized allegations that defendants did not disclose these charges. See id. Here, in contrast, the very point of Plaintiffs 349 claim is that Defendants disclosed charges of $0.75 per page. (Class Action Compl. 62, 77, 90.) Far from being exculpatory, this disclosure was misleading because the costs incurred were less than $0.75 per page. In this regard, Moore s 349 claim is not based solely on the fact that Defendants charges were excessive, see Feder at 17, but also on the ground that the charges disclosed misrepresented the costs incurred. NYUHC touts Feder as controlling, but ignores Oswego, the New York Court of Appeals case that is controlling. (NYUHC Mem. at 14.) Under Oswego, in an overcharge case such as this where PHL 18 prohibits charging more than the costs incurred, the relevant charge that should be disclosed to qualified persons would be the costs incurred by such provider in making copies. See PHL 18(2)(e). That is, the information known only to Defendants. Indeed, NYUHC gives short shrift to two recent cases with nearly identical facts that applied Oswego and rejected the argument NYUHC is now making. Both Spiro and McCracken 6 Gavlin Aff. Ex. J 7 11 of 12

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