Coalition Against Insurance Fraud: New York's Highest Court Upholds Anti-Fraud Immunity Law Against Unwarranted Defamation Suits

ALBANY, New York, Nov. 21 -- The Coalition Against Insurance Fraud issued the following news release:

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- Court precedent could protect fraud fighters against unwarranted actions around U.S.

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New York's immunity law shields fraud fighters from defamation suits by medical providers who insurers report in good faith to the state medical board for suspected scams, New York's highest court ruled this week in a major victory for fraud fighters.

The important precedent has national implications. The decision could help defend against similar defamation challenges to anti-fraud immunity laws in other states. In effect, the ruling could bolster protections of fraud fighters from unwarranted defamation suits around the U.S. when they report suspected scams in good faith.

New York's highest court agreed with an amicus brief the Coalition and NICB jointly filed to defend the state's immunity law.

New York's public-health law grants explicit immunity from defamation suits involving good-faith reporting of suspected scams, the state Court of Appeals says.

"... in order to encourage increased reporting of unprofessional conduct, the legislature specifically sought to shield complainants from liability by imparting a limited immunity from civil actions commenced by regulated entities ..." the court says.

Medical providers have no implied right to sue fraud fighters for defamation under New York's public-health law, the court adds. The law was not passed to protect physicians. It was passed to encourage good-faith reporting of suspected scams. Medical providers can defend themselves in any administrative proceeding, and have a right of action under common law.

"Simply put, there is no indication that physicians accused of misconduct were the intended beneficiaries ..." the court ruled.

The Coalition and NICB sought to support fraud fighters by defending New York's immunity law. The court's decision closely tracked the joint amicus brief the groups filed in the action.

"The Legislature decided to remove what it considered to be an obstacle to reporting -- namely fear of litigation -- by granting insurers qualified immunity," the two groups contended in their brief.

The amicus was drafted by Susan Phillips Reed. She's a former associate judge of the New York State Court of Appeals -- the state's highest court -- and now of counsel to the law firm of Greenberg Traurig.